Rice leaders oppose MOP changes

Forrest Laws Farm Press Editorial Staff | Aug 08, 2003

USA Rice Federation leaders have written the Bush administration urging it to strongly oppose any attempts by the European Union to renegotiate the margin of preference concessions for sales of U.S. brown rice to the EU.

The letters to Agriculture Secretary Ann Veneman and U.S. Trade Representative Robert Zoellick came on the heels of the European Commission's vote to reform the EU's Common Agricultural Policy, including a 50 percent reduction in the intervention price for rice and other commodities.

But the European Commission also notified the World Trade Organization that it intends to try to alter the margin of preference concession on rice, which was first agreed to under the Uruguay Round of the old General Agreement on Tariffs and Trade.

“The WTO notification earlier this month by the European Communities that the EC intends to renegotiate, under Art. XXVIII, the margin of preference concession as regards rice is a serious threat to market access for U.S. rice,” the letter said.

“This notification also runs completely counter to the market access expectations of the United States and many other WTO members in the Doha Round negotiations. We urge a strong response in opposition by the administration formally in the WTO and bilaterally with the European Commission.”

The letter explained that the MOP concession is the foundation for the U.S. market for brown rice in the EC, the fifth largest market for U.S. rice. The United States shipped 396,000 metric tons of rice, valued at $72 million, to the EU in 2002. Because of prohibitive duties outside of the MOP, and the failure of the EC to implement fully the MOP for milled rice, access for U.S. rough and milled rice is severely limited.

“The heart of the MOP is the link between EC rice intervention prices and import duties for brown rice,” the letter said. “In effect, the lower the rice intervention price, the lower the import duty. Last month's reform of the domestic EC rice regime as part of the Midterm Review of the Common Agricultural Policy cut intervention prices by 50 percent.

“This reform was long overdue. U.S. brown rice exporters and their customers in the EC are now expecting to reap the benefits in the form of a substantial drop in duties from the current Euro 264 per ton to as low as Euro 60 per ton, based on current prices.”

U.S. exporters are unlikely to benefit from these lower duties, however, if the MOP is negotiated, said the letter signed by USA Rice Chairman Gary Sebree and President and CEO Stuart Proctor.

“In fact, the EC is moving backwards on rice by seeking to restrict market access (through a new MOP) in an effort to backstop domestic reform,” they said. “U.S. rice producers and millers should not be forced to pay for the EC's policies.”

The writers said the opening up of the EC market to unlimited amounts of rice from developing countries by 2009 under the EC's Everything but Arms policy makes it even more important that access under the MOP be maintained.

“While the European Commission seeks to manage access on selective criteria, the U.S. industry is looking to the not-too-distant future when U.S. rice exports will need to be on a level playing field with our competitors in the developing countries,” they said.

“We urge that the administration send a strong message to the EC against a renegotiation of the MOP. We understand that there is opposition among some member states to a renegotiation. The Federation of European Rice Millers is also firmly on record in opposition. And we believe there is support within the EC for resolution of this issue outside of a formal Art. XXVIII negotiation.”

Sebree and Proctor also cited the administration's response to the European Community's efforts to re-negotiate the margin of preference for other grains.

“While the current situation is not identical to last year's effort by the EC to renegotiate the MOP for wheat and other grains, the administration's timely and unambiguous response then was important to the preservation of the MOP for U.S. wheat,” they said.

“This administration's support for rice market access in Mexico, Central America, Japan, and Taiwan is well-known to our members, and we are thankful. We urge you, on behalf of U.S. rice producers, millers, and exporters, to protest the EC's plan as counter to the objectives of the Doha negotiations.”

The federation said its leaders have also met with rice-state congressmen on the issue and, along with representatives from the U.S. Rice Producers Association, are scheduled to meet with USDA and USTR representatives to discuss the next steps for the U.S. government.